Understanding the
1031 Exchange

Defer capital gains taxes on real estate by following the IRS’s powerful investment property swap program.

Trusted Title & Closing Services in New Hampshire, Massachusetts & Maine

40+ Years of Local Expertise in Residential,
Commercial & Estate Closings

Understanding the
1031 Exchange

Defer capital gains taxes on real estate by following the IRS’s powerful investment property swap program.

What Is a 1031 Exchange?

A 1031 Exchange allows real estate investors to defer capital gains taxes when they sell one investment property and acquire another of like-kind. It’s a powerful wealth-building tool — but one that must follow strict IRS guidelines.

Note: A 1031 exchange must be handled by a Qualified Intermediary. If you don’t already have one, contact Accurate Title for suggested partners — we’ll work directly with your chosen QI to coordinate a smooth closing.

How Accurate Title Supports Your Exchange

  • Coordinate with your qualified intermediary (QI)

  • Prepare and review all legal documentation

  • Handle escrow, disbursement, and title policy issuance

Who We Work With:

  • Individual real estate investors

  • Developers and builders

  • Real estate attorneys and CPAs

  • Title and exchange intermediaries

Exchange Requirements:

  • Properties must be held for investment or business use

  • Replacement property must be of like-kind

  • New property must be identified within 45 days

  • Purchase must be completed within 180 days

  • A qualified intermediary must hold the sale proceeds

Key Dates:

  • Day 0: Close on Relinquished Property

  • Day 1–45: Identify up to three replacement properties

  • Day 1–180: Close on replacement property

What to Look for in a QI:

  • IRS compliance and insurance

  • Experience with real estate investment

  • Transparent fees and timeline communication

  • Strong coordination with title and legal teams

Why Use Our Referrals:

  • We’ve worked with these providers across dozens of deals

  • They understand NH, MA, and ME title laws

  • Easy integration with our escrow and document systems

Frequently Asked Questions

1. What is a 1031 Exchange?

A 1031 Exchange (named after Section 1031 of the IRS tax code) allows real estate investors to defer capital gains taxes when they sell one investment property and reinvest the proceeds into another "like-kind" property.

2. Why would I do a 1031 Exchange?

The main benefit is tax deferral. You don’t pay capital gains taxes at the time of sale, giving you more equity to invest in another property—potentially increasing your buying power and long-term growth.

3. What qualifies as "like-kind" property?

In real estate, "like-kind" means any real property held for investment or business purposes—so:

> You can exchange a rental home for a retail building

> A vacant lot for a multi-family property

> A commercial office for a warehouse

Personal-use properties like a primary residence or second home don’t qualify.

4. Who can do a 1031 Exchange?

Anyone who owns property for investment or business purposes may qualify. This includes individuals, LLCs, corporations, partnerships, and trusts.

5. What are the key timelines in a 1031 Exchange?

There are two critical deadlines:

> 45-Day Rule: You must identify your replacement property(ies) within 45 days of selling your current property.

> 180-Day Rule: You must close on the new property within 180 days of the sale.

These deadlines run concurrently—not sequentially—and must be strictly followed.

6. Can I take the proceeds and reinvest later?

No. To defer taxes, you cannot touch the sale proceeds. Funds must go through a Qualified Intermediary (QI) who holds the money and transfers it to the replacement property.

7. What is a Qualified Intermediary (QI)?

A QI (also called an exchange accommodator) is a neutral third party who:

> Holds the sale funds

> Prepares exchange documentation

> Ensures compliance with IRS rules

You cannot use your real estate agent, attorney, or accountant as your QI.

8. Are there different types of 1031 Exchanges?

Yes, including:

> Delayed Exchange (most common): Sell first, then buy.

> Reverse Exchange: Buy new property before selling the old one.

> Build-to-Suit Exchange: Use proceeds to improve the replacement property.

Each has strict requirements and may need advanced planning.

9. Do I have to reinvest the entire amount?

To fully defer taxes, yes. You must reinvest:

> All net proceeds from the sale, and

> Take on equal or greater debt on the new property

If you take any cash or reduce debt, you may owe tax on that portion (called a boot).

10. Does a 1031 Exchange eliminate taxes forever?

Not necessarily. It defers them—but if you keep exchanging, you can defer taxes indefinitely.

If you pass away owning the property, your heirs may receive a step-up in basis, potentially eliminating capital gains taxes altogether.

Start Your Exchange
With Confidence

Start Your Exchange
With Confidence

Accurate Title provides real estate title, closing, and estate planning services in Bedford, Portsmouth, and Laconia, NH, serving clients throughout New Hampshire, Massachusetts, and Southern Maine.

© Copyright 2026. Accurate Title NH. All Rights Reserved.

Powered by Launch360